SHARE:  
Vailshire Logo
Live Well. Invest Wisely.
~ Vailshire Partners Quarterly Memo ~

To clients of Vailshire Partners LP hedge fund:


  • Going forward, I am greatly looking forward to focusing much more intently on Vailshire Partners LP hedge fund and doing my best to outperform traditional stock and bond portfolios
  • Unlike US net liquidity, global M2 has finally broken higher out of its roughly three-year range of consolidation
  • I believe that we have recently completed a phase transition, and the US and global economy is poised to accelerate alongside less-hawkish central banks and minimally increasing inflation


4Q 2024... The Quarter We Have Been Waiting For

Hello from Colorado Springs!


I hope all is well with each of you.


As discussed in the 3Q 2024 quarterly memo, much has been happening behind the scenes at Vailshire in recent months. Voluntarily withdrawing Vailshire's registration as an investment advisor and closing down its separately managed account services have required much time and effort on my part.


Going forward, I am greatly looking forward to focusing much more intently on Vailshire Partners LP hedge fund and doing my best to outperform traditional stock and bond portfolios. So far, so good!


As the US Net Liquidity and Global M2 chart (below) shows, US net liquidity remains rangebound within a 2.5-year choppy sideways pattern. The performance of US-based micro/small/mid-cap stocks tend to reflect the movement of US net liquidity and, accordingly, continue to be crab-like (moving sideways) in their performance.


Good news, however, can be seen in the lower half of the chart, which depicts global M2 monetary supply. Unlike US net liquidity, global M2 has finally broken higher out of its roughly three-year range of consolidation. This bodes well for global risk assets and stores of value like bitcoin, gold, and US megacap technology stocks. Since I write about this topic often, it is no surprise that these global assets are at or near all-time highs... and we are finally seeing good results in our fund again, after several months of crabby behavior!


Coordinated central banks around the world are shifting their *efforts* from inflation reduction to economic support. Lower federal fund (and related) short-end interest rates mean lower variable rates for individuals and small businesses. And this directly translates into more cash in the bank for future investments.


I expect the coming quarters to reveal a surprisingly strong US economy (to the dismay of many Doom and Gloomers), as well as a return (thought tempered) of inflation, in the US and around the world. This expected combination of mildly expanding economic growth and inflation, along with central bank easing, may result in a healthy performance of risk assets and bitcoin as we head into 2025.


US Net Liquidity and Global M2 Update (see chart below). As the graph shows, US net liquidity has continued to chop sideways over the past ~2.5 years. However, global M2 monetary supply has *finally* broken to the upside after an approximately three-year stint of consolidation. -- Based on the large allocation of high beta global assets within our fund, this bodes well (in my opinion) for the coming quarters!

Performance Review **(edited for general distribution; actual data only for Vailshire Partners LP clients)**

As shown in the (unaudited) table below (only available for Vailshire Partners LP clients), Vailshire Partners LP hedge fund (net of fees) had a solid third quarter performance, returning XX%.


This has added to our year-to-date outperformance of the of the S&P 500 total return (which includes dividends) by a whopping XX%... XX% to XX%.


Over the past 12 months, our fund returned XX% (unaudited), beating the S&P 500 total return (of 36.35%) by over XX%!


Over the past three years, the annualized performance of the fund (net of all fees; unaudited) has been XX%, as compared to a 11.91% net annualized total (dividends included) performance of the S&P 500.


Over the past five years, the annualized performance of the fund (net of all fees; unaudited) has been XX%, as compared to a 15.98% net annualized total (dividends included) performance of the S&P 500.


Over the past ten years, the annualized performance of the fund (net of all fees; unaudited) has been XX%, as compared to a 13.38% net annualized total (dividends included) performance of the S&P 500.


Since the fund's inception in January 2014, Vailshire Partners LP has achieved a XX% (unaudited) annualized performance, net of all fees.

4Q 2024 Investment Strategy

Awaiting The Next Rally

The chart above shows the impressive five-year performance of Fair Isaac Corporation (ticker: FICO). We have added a small (starter) position of the FICO Score creator to the fund and hope to add to our long-term position over the coming quarters and years.


Over the past quarter, we initiated new (small) positions in Fair Isaac Corporation (see chart and description, above) as well as the Global X MSCI Argentina ETF (ticker: ARGT). As for the latter position, the recent election of Javier Milei has quickly let to an impressive overhaul of Argentina's bloated government agencies and policies, and has already enabled rising economic growth in the setting of shocking fiscal restraint. I am of the opinion that, with Milei in charge, Argentina will undergo a powerful renaissance and economic resurgence over the coming years. It will be fun and interesting to invest alongside of this history-in-the-making.


Here is a list of our top ten holdings by position size (as of September 30, 2024):


  1. MicroStrategy Incorporated (ticker: MSTR)
  2. Fidelity Wise Origin Bitcoin Fund ETF (FBTC)
  3. Bitcoin (spot, held at Paxos via Interactive Brokers)
  4. MSTR Dec 19, 2025 call options
  5. Annaly Capital Management, Inc. (NLY)
  6. CLSK Jan 16, 2026 call options
  7. Texas Pacific Land Corporation (TPL)
  8. NVIDIA Corporation (NVDA)
  9. Broadcom Inc. (AVGO)
  10. AutoZone, Inc. (AZO)


The most obvious takeaway is that our bitcoin and bitcoin-proxy positions have risen to the top of our fund portfolio over the past 12 months... and have been the primary drivers of our performance.


** Related, I was recently notified by BarclayHedge that Vailshire Partners LP hedge fund was the world's top performing multi-strategy hedge fund for the month of July (according to their database), for the third time in 2024... a notable achievement for any fund.


In Conclusion


You may recall that at the end of 1Q 2024, I encouraged my investors to set realistic (and lower) expectations for the coming couple of quarters after a stellar first quarter performance for the fund.


Thankfully, as of early October 2024, we have endured what I believe to be the worst of the spring and summer doldrums, and the legendary bullcrab market has drawn to a close.


As I wrote earlier, I believe that we have recently completed a phase transition, and the US and global economy is poised to accelerate alongside less-hawkish central banks and minimally increasing inflation. This combination bodes well for our aggressive asset allocation... and I believe that we are poised and positioned to do quite well over the coming 12-13 months.


Whatever happens, I am thankful to have you along for the ride, as helping others Live Well and Invest Wisely has been my creed since the founding of Vailshire Capital Management LLC way back in 2013.


Onwards!


Living well and investing wisely with you,


Jeff Ross, MD/MBA

Read More
Make Contact With Us
Address:
3835 Edgecliff Ct.
Colorado Springs, CO 80904
 Phone: (719) 330-1640 (Mobile)
Facebook  Twitter